Disposition Premiums
DCX is up again today on speculation that Daimler is closer to getting rid of its Chrysler unit. Supposedly - Magna (MGA) and private equity are teaming up to offer a bid of $4.7 billion. Finally, a number has been placed on the Chrysler deal so that’s a good thing. But I cannot help wondering whether Dieter should not sell Chrysler. Talk about selling it? Yep - keep doing that every time DCX stock starts to pullback a bit, let the hype push up prices and repeat as necessary. By my calculations, since Dr. Z said “all options are on the table” and got this party started, DCX has increased $17.50 per share or approximately $18 billion in market cap. Usually we look at M&A activity and discuss synergies and takeover premiums, but this time it’s different. Chrysler is such a mess that DCX shareholders keep paying more for the hope of a “Chryslerless” security and we actually see a disposition premium. So far that premium is being valued at $18 billion and I find it funny that Dieter has increased the market value of his firm more from selling the EADS stake and trying to sell Chrysler than he has by selling cars. What is he going to do if he gets rid of Chrysler?

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